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Only an arbitrator's failure to disclose the "existence or nature" of his or her relationship with a party to arbitration, and not merely the failure to disclose the specifics of such a relationship, requires vacatur of an arbitration award under California law, according to the California Court of Appeal.
In Dornbirer v. Kaiser Foundation Health Plan, Inc., No. D051408, 2008 WL 4140580 (Cal. Ct. App. Sept. 9, 2008), Dornbirer received a mammogram at a Kaiser facility. A dispute arose as to whether Kaiser properly notified Dornbirer of an irregularity on the mammogram that later developed into cancer. Dornbirer filed a demand for arbitration as required by the parties' agreement.
The parties mutually selected Adelman to arbitrate the dispute. During the selection process, Adelman disclosed his prior service as an arbitrator in cases involving Kaiser and the law firm representing Kaiser. At the time, neither party objected to Adelman serving as arbitrator. Adelman subsequently issued an award in favor of Kaiser.
Dornbirer petitioned to vacate the award, alleging that Adelman had not made the statutorily-required complete disclosure of all prior matters involving parties to the arbitration under Cal. Code Civ. Proc. § 1281.9 (requiring disclosure of "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"). The trial court denied her motion and confirmed Kaiser's award.
On appeal, Dornbirer argued that Adelman's disclosure did not entirely comply with § 1281.9, and therefore, the trial court should have vacated the award under Cal. Code Civ. Proc. § 1286.2(a)(6)(A) (vacatur required when the arbitrator "failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware").
The Court characterized Adelman's initial disclosure as, at most, "ambiguous." According to the Court, an alternative reading of the disclosure might lead a party to believe that Adelman had only participated in 15 arbitrations where Kaiser was a party, instead of the 26 in which Adelman actually participated. However, the Court found that any reading "was sufficient to put Dornbirer on notice that Adelman had served as an arbitrator in a large number of such cases." The Court noted that Dornbirer, once on notice, had an opportunity to ask for clarification or even removal but failed to do so.
Furthermore, the Court held that a reasonable reading of the statutory ground for vacatur for failure to disclose did not require complete and perfect disclosure to avoid vacatur. Instead, the Court found that the statute referred to situations where there was "a failure to disclose the existence and nature of any relationship" between parties and the arbitrator, "not the specifics of each such relationship." To hold otherwise, stated the Court, would compel vacatur of awards with merely minor disclosure defects where the disappointed party was fully on notice of any potential conflict before the award was issued.
Accordingly, the Court affirmed the trial court's confirmation of Kaiser's award and rejected Dornbirer's vacatur challenge based on incomplete disclosure.
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