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An appellate court in California determined that the effect of a trial court judge's failure to recuse himself from hearing a motion to compel arbitration after having employment discussions with the arbitration administrator was to vacate the order to compel arbitration, but leave intact the resulting arbitration award for a new judge to determine whether it should be upheld.
In Rossco Holdings Inc. v. Bank of America, No. B189963, 2007 WL 1152977 (Cal. Ct. App. Apr. 19, 2007), the judge issued an order compelling arbitration but later recused himself because he had engaged in employment discussions with the arbitration administrator. The arbitration proceeded and an award issued. Rossco moved to vacate the order compelling arbitration in light of the judge's recusal. The trial court granted the motion and also vacated the award, as it had arisen from a vacated order to compel. The Bank appealed.
On appeal, the Court held that it was proper for the order compelling arbitration to be vacated. It was not necessary to show good cause in vacating the order. The facts disqualifying the judge were in existence at the time the Bank moved to compel arbitration. Although the judge was not aware at the time that the facts disqualified him, he had been made aware of their existence.
However, the Court held that the order to vacate the arbitration award was "premature." Vacatur of the arbitration award does not necessarily follow vacatur of the order compelling arbitration. The arbitration itself took place without the judge. The parties were required to arbitrate based on an arbitration agreement "independent" of the order compelling arbitration. If the court vacated an award that had been issued by impartial arbitrators, it would reflect negatively on the judiciary. A second arbitration would be made necessary just because the judge granting the motion to compel shouldn't have ruled on that motion, undermining principles of judicial economy. Instead, the Court reversed the order vacating the arbitration award and remanded the case for a new judge to determine whether arbitration should have been compelled in the fist instance. If the first ruling was correct, Bank of America could continue to seek confirmation of the original award.
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