Court Speaks with More than One Tongue on the Disclosure of Arbitrator’s Bias

On August 2, 2010 the California Supreme Court saw no problem with the fact that a disgraced and discredited retired judge – who was publicly censured for creating “an overall courtroom environment where discussion of sex and improper ethnic and racial comments were customary” – served as an arbitrator in a medical malpractice case brought by a female patient, without even disclosing the censure to the parties. The Court, in an opinion for which it should be deeply embarrassed, basically held that a retired judge’s clearly sexist and harassing conduct towards female staff does not in any way establish that the judge holds any bias against female litigants enough to even disclose the fact. In reality, the Court simply felt that the finality of arbitration awards was more important than fairness to the female plaintiff. Haworth v. Superior Court (Ossakow) S165906.

On October 12, 2010, the California Court of Appeals did what it could to limit the impact of this holding and raised some very good issues while doing so. Addressing a different set of facts involving potential arbitrator bias, it ruled the other way, distinguishing the facts from Haworth. In Benjamin, Weills & Mazer v. Kors, A125732, the arbitrator failed to disclose that he regularly represented law firms in fee disputes, in a case involving just such a fee dispute, i.e. he did not disclose that he normally and currently represents one side in the very type of case before him. The Court of Appeals held that the arbitrator should have disclosed this. The court held that this business relationship “could reasonably cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial.”
The Court went on to approve of a broader disclosure for an arbitrator than what is required for a judge, and to analyze the different circumstances and interests of arbitrators and judges. Explaining that since arbitrators have their own business interests, and that private arbitration as a whole “is a commercial enterprise”, the situation is different than the judicial system. (Indeed, there are other reasons to provide a higher level of scrutiny to arbitrator bias than judicial bias. For example, an arbitrator is the gatekeeper and fact finder, judge and jury, whereas in a court preceding the litigants normally have the right to a jury to act as the ultimate fact finder instead of the judge).

These two cases exemplify a problem that occurs every day in arbitrations. Arbitrators aren’t necessarily neutral; and it is difficult to even find out what an arbitrator’s biases are. Discloses are minimal and sometimes intentionally obfuscate the arbitrator’s bias. In employment cases, where the employer often mandates an arbitration without the employee having any free choice and where the employer often hand picks the panel from which the arbitrator will be selected, this lack of transparency and choice is especially troubling.
The legislature should promulgate legislation requiring neutral panels of arbitrators and rigorous disclosures of biases. This should apply not only to situations covered by Kors but also by situations covered by Haworth. After all, the arbitrator is the ultimate fact finder and in the exact same position as a jury. There is no doubt that a juror could be asked to disclose and discuss the very biases referred to in Haworth, i.e. whether the fact that he was censured for sex discrimination and harassment against court staff might result in bias in a case involving a female plaintiff bringing a claim.
Unless and until the legislature fixes this problem, we’ll have to limp along, doing the best we can to probe arbitrator biases and make pre and post arbitration motions to disqualify arbitrators and set aside arbitration results where necessary. The Kors case will assist in this process but victims of discrimination and other litigants deserve more.

Jody LeWitter
Siegel & LeWitter
October 18, 2010