By Carole J. Buckner
Grabowski v. Kaiser Foundation Health Plan, Inc., 64 Cal.App.5th 67 (2021) provides a cautionary tale for lawyers in arbitration concerning ex parte communications with arbitrators. During a break in the arbitration hearing in this medical malpractice case, with the plaintiff out of the room, the arbitrator made comments to defense counsel “making light of [plaintiff’s] self-representation, and her ability in the arbitrator’s view, to effectively represent herself.” The arbitrator and defense counsel “shared a hearty laugh” about plaintiff’s shortcomings as an advocate. The discussion was not disclosed to plaintiff. After a five-day arbitration, the arbitrator found in favor of the defendant, rejecting the plaintiff’s expert’s theory that defendant breached its standard of care.
The trial court found the arbitrator’s conduct both improper and unethical, but not substantially prejudicial to plaintiff’s rights. On appeal, the court addressed whether the discussion constituted arbitrator misconduct given the statutory and ethical obligations to disclose all matters that could cause a person aware of the matter to reasonably entertain a doubt about the arbitrator’s impartiality. Ultimately, the appellate court vacated the arbitrator’s award.
You may wonder how the plaintiff revealed the ostensibly private conversation. To document the matter, plaintiff’s mother recorded the arbitration hearing with her cell phone. When plaintiff and her mother left the arbitration hearing, the mother inadvertently left the cell phone on, so the recording continued, capturing the conversation.
Plaintiff argued the arbitrator was “yukking it up” with defense counsel and that the arbitrator’s tone and laughter demonstrated a disregard and disrespect for plaintiff, exhibiting bias, a grounds for disqualification, requiring the court to vacate the award. Kaiser opposed the request, arguing the ex parte discussion did not involve the merits, was not derogatory and did not demonstrate bias, and therefore did not constitute misconduct.
The appellate court vacated the award even without a showing of prejudice because the arbitrator had failed to disclose the communication as required by the applicable statute and ethical standards. Arbitrators are prohibited from initiating, permitting or considering ex parte communications outside the presence of all parties, with limited exceptions. Arbitrators also must disclose the existence of any ground for disqualification of a judge, including facts that could cause a person to reasonably entertain doubt about the judge’s impartiality. “Impartiality” connotes the absence of bias or prejudice in favor of, or against, a party, and maintenance of an open mind. Applicable ethics standards make this a continuing duty.
The key issue was whether the arbitrator was required to disclose the discussion to allow the plaintiff to seek disqualification. The court opined that the arbitrator’s decision to share his conclusion about plaintiff with defense counsel showed the arbitrator felt a connection to defense counsel which made the arbitrator comfortable enough to violate ethics rules.
The recording featured prominently in the court’s decision. The court characterized the arbitrator’s tone and attitude “striking,” and found that a reasonable person could think that the arbitrator did not take the plaintiff seriously, could not maintain an open mind, and was both biased against the plaintiff due to her self-represented status, and biased in favor of defense counsel.
Kaiser ultimately conceded that a reasonable person aware of the ex parte discussion could doubt the arbitrator’s impartiality. The court held that disclosure was required to give plaintiff the opportunity to disqualify the arbitrator. Plaintiff suffered substantial prejudice because, without disclosure, plaintiff could not exercise that statutory right. This required the court to vacate the arbitration award.
Understanding and adhering to statutory and ethical standards in the arbitration setting is critical to preserve the neutrality and integrity of the private system of adjudication. The formality of a courtroom more naturally separates judicial officers from counsel. The relative informality of an arbitration hearing may compromise that important structure. It remains incumbent upon arbitrators and lawyers to understand the statutory and ethical standards applicable to arbitrators and comply with them in order to avoid having an arbitration award vacated and to assure justice.
Carole is a partner at Procopio, Cory, Hargreaves and Savitch and chair of the SDCBA Legal Ethics Committee. Any views expressed are those of the author and not of the Procopio firm, the SDCBA or the Legal Ethics Committee.