Dissent By Justice Rubin Emphasizes That Disclosure Rules Must Be Broader Than Disqualification Rules
I have a sidebar category for “disclosures.” Perhaps I should add one for “disqualification”, because as the lengthy dissent of Justice Rubin explains in Safarian, Choi & Bolstad, LLP v. Minassian, No. B262526 (2/8 April 7, 2016) (Bigelow, P.J.) (unpublished), the requirements for disqualification of an arbitrator are not identical with those for disclosure. As the dissent also points out, the standards for disqualification and disclosure are often confused – so for now, I will stick to one sidebar category, faithfully reflecting the current state of confusion in case law.
The underlying fee dispute between the law firm (SCB) and its client Minassian was straightforward. The client believed that a handshake agreement superseded the written agreement, and that he had been overbilled. The law firm and the client engaged in fee arbitration under a program administered by the LACBA. The arbitration panel determined that the engagement letter was void, because SCB failed to issue monthly invoices and the invoice it did issue failed to clearly identify who worked on what. However, the panel awarded an amount for the value of services rendered. The trial court affirmed the award, and the client appealed.
The issue dividing the appellate majority and the dissent was whether the panel chair should have disclosed the fact that much of his practice consisted of the representation of lawyers against lawyers. The majority held that there was no reasonable basis to believe that the panel chair could not be fair to a client in a fee dispute simply as a result of the nature of his legal practice, in a case where the dispute to be arbitrated was between a law firm and a client, not between lawyers. The majority refused to extend the holding of a key case, Benjamin, Weill & Mazer v. Kors, 195 Cal.App.4th 40 (2011), in which the “arbitration award in favor of a law firm in a fee dispute with a client was reversed because the chief arbitrator failed to disclose his representation of large law firms in similar cases, including of a law firm in a fee dispute with a client and of another law firm in a malpractice action against it.”
While agreeing that the current case was “less egregious” than the Benjamin, Weill case, Justice Rubin wryly adding, “’not as egregious’ arguments rarely take us very far.” Justice Rubin explored the historical development of disqualification rules for arbitrators and for judges, explaining that they have “different blood lines” and that they are not identical. “But the standard for disclosing information that is reasonably relevant to potential disqualification should be identical,” he concludes, “even though the specific grounds for disqualification may differ from judge to arbitrator.”
Justice Rubin also had no doubt that the information that the panel chair’s “law practice was in large measure devoted to representing lawyers was ‘reasonably relevant’ to the issue of disqualification.”
Two themes run through the dissent. One theme is that rules of disclosure must be more broader in their application than rules of disqualification. Otherwise, judges and arbitrators could simply disqualify themselves, and there would be no need for disclosure.
The second theme is that case law and standards are muddled by confusing terms such as “might”, “could”, and "would", with would “used pretty uniformly throughout to describe the judge’s likely ability to be impartial, not the state of mind of the litigant that triggers disclosure.” For example, the majority wrote, “We fail to see how this [failure to disclose] would cause a person to reasonably entertain a doubt that Rolston would be able to be impartial to a client.” (italics added). Justice Rubin believes that proper application of the test would be whether the failure to disclose “might” or “could” cause a person to reasonably entertain doubt that the arbitrator would be impartial.
DISCLOSURE: The panel chair, Berne Rolston, was a founder of Fulop, Rolston, Burns & McKittrick, a Beverly Hills law firm. Rex McKittrick moved on to found McKittrick, Jackson, DeMarco & Peckenpaugh. I was a shareholder of the latter firm. I don’t know Berne Rolston. But as you can see, I do have a connection, which, however, has not affected my absolute impartiality.