The right to object to an arbitrator's authority is waived when the arbitrator properly discloses any possible source of bias and the parties then fail to object to the arbitrator's authority until after an award is issued, according to the California Court of Appeal.

In Vargas v. Cedars-Sinai Medical Center, No. B197520, 2008 WL 331068 (Cal. Ct. App. Feb. 7, 2008), Vargas brought claims of discrimination and failure to accommodate against former employer Cedars-Sinai. The trial court ordered the claims to arbitration in accordance with the parties' prior agreement.

After an award was entered in favor of Cedars-Sinai, Vargas objected to the American Arbitration Association (AAA), the arbitration administrator, alleging arbitrator bias. Vargas specifically objected to the arbitrator's authority because he had been a patient at Cedars-Sinai's facility. The AAA denied that it had any authority to hear Vargas's objection.

Cedars-Sinai later petitioned to confirm the award. In response, Vargas filed a motion to vacate, again alleging arbitrator bias. The trial court granted the motion to confirm and denied the motion to vacate, holding that Vargas had not presented sufficient evidence of bias.

The Court of Appeal determined that the arbitrator had timely disclosed the fact that he had been a patient at the Cedars-Sinai facility. After the disclosure, Vargas continued to participate in the proceedings and only objected once the award was issued. This continued participation with knowledge of the arbitrator's treatment and without objecting during the proceeding functioned as a waiver of the right to object after the award was issued.

The Court also held that, under the imputed knowledge theory, the treatment disclosure was effective even though it was in the presence of a lawyer that was not primary counsel for Vargas, but was a representing member of the same firm.