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Professional Relationship Between Arbitrator’s Wife and Defense Counsel Not Ground to Vacate Arbitration Award
Professional Relationship Between Arbitrator’s Wife and Defense Counsel Not Ground to Vacate Arbitration Award
Johnson v. Gruma Corp. (9 th Cir. (Cal. The Ninth Circuit recently refused to vacate an arbitration award on the ground that the arbitrator failed to disclose his wifeaEUR(TM)s former professional relationship with the law firm ultimately retained to represent the defendant in the arbitration. The plaintiff filed suit against Gruma Corporation in 2001, alleging that Gruma misrepresented to the plaintiff and other class members that they were independent contractors when they were, in fact, Gruma employees. The complaint contained causes of action sounding in breach of contract, labor code violations, and unfair business practices. Upon GrumaaEUR(TM)s motion, the district court ordered the claims submitted to binding arbitration. The arbitrator found for Gruma, concluding that the class members were properly classified as independent contractors rather than employees. The district court confirmed the arbitration award and the plaintiff appealed. The plaintiff argued that the arbitration clause in the partiesaEUR(TM) agreement required the district court to apply the California Arbitration Act (aEURoeCAAaEUR?) disclosure and vacatur standards rather than those of the Federal Arbitration Act. The Ninth Circuit agreed, finding that the arbitration clause in the partiesaEUR(TM) agreement was more than a general choice-of-law provision and indicated that the parties intended to be governed by the CAAaEUR(TM)s rules The plaintiff next argued that a mandatory vacatur of the arbitration award was required because the arbitrator failed to disclose that his wife had been a partner at the law firm that became GrumaaEUR(TM)s counsel five years into the arbitration. The court concluded that the arbitrator complied with the CAAaEUR(TM)s rules governing initial disclosures since his wifeaEUR(TM)s former law firm was not counsel for Gruma when the arbitration commenced in 2002. As for supplemental disclosure, the court noted that the CAAaEUR(TM)s supplemental disclosure rules did not require the arbitrator to disclose the relationship between GrumaaEUR(TM)s counsel and his wife. To this end, the court found that the arbitratoraEUR(TM)s wife ended her employment at the subject law firm two years before the law firm (and her former colleague) became involved in the arbitration. The court also noted that the plaintiff failed to demonstrate that the relationship between GrumaaEUR(TM)s counsel and the arbitratoraEUR(TM)s wife would create a reasonable impression of partiality on the part of the arbitrator. Even if it did, however, the court held that the plaintiff waived his objection to the disclosure by not raising it until after the arbitration award was issued despite knowing of the relationship aEURoea year or twoaEUR? before the arbitrator rendered his decision. For a copy of the case, click here
Carrie Appler and Sharon Angelino http://www.goldbergsegalla.com/attorneys/Appler.html http://www.goldbergsegalla.com/attorneys/Angelino.html
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