It All Depends On What “Waiver” Means
In United Health Centers Of The San Joaquin Valley, Inc. v. Superior Court of Fresno County, Case No. FO67763 (5th Dist. Aug. 25, 2014) (Gomes, Kane, Detjen), Dr. Jennifer Vradenburg-Haworth, the Real Party in Interest, sued her employer UHC in a wrongful termination case, was compelled to arbitrate, didn’t like the arbitrator’s award, and tried to get the trial court to vacate the arbitration award because the arbitrator admittedly failed to comply with the mandatory disclosure requirements of Cal. Code Civ. Proc., sections 1281.9 and 1281.85. And in fact she succeeded in getting the trial judge to vacate the arbitration award, prompting UHC to initiate a writ proceeding..
The trial court refused to follow Dornbirer v. Kaiser Foundation Health Plan, Inc., 166 Cal.App.4th 831 (2008), “in which the appellate court held that the statutory scheme does not require an arbitration award be vacated when the arbitrator has disclosed the grounds for disqualification generally, but has not provided all of the specific details required by section 1281.9, and the parties nevertheless agreed to proceed with the arbitration.” Why didn’t the trial court believe that Dornbirer was good law? Because Cal. Code Civ. Proc., section 1281.85(c) provides that ethics requirements and standards applicable to arbitrators “are nonnegotiable and shall not be waived.”
This required the Court of Appeal to confront whether Dornbirer has been overruled by the explicit statutory language – and just exactly what “waiver” means.
The Court of Appeal explains that “'’waiver’ can have multiple meanings.” The Court endorses the position that section 1281.85(c), was enacted to “prohibit contractual waivers of the statutory right to disqualify an arbitrator, not forfeitures of rights resulting from the failure to perform an act.” Given this narrow reading of the meaning of “waiver”, the Court rejects “Vradenburg-Haworth’s contention that Dornbirer has been overruled by statute.”
Because the trial court rejected the applicability of Dornbirer, it never reached "[t]he issue in this case . . . whether the facts, as presented in the declarations filed below, show that Vradenburg-Haworth’s attorneys had actual knowledge of a ground for disqualification before the arbitration commenced.” Therefore, the Court of Appeal granted the writ petition, and the superior court must now reconsider the parties’ petitions in light of the Court’s view that Dornbirer is good law, and that “waiver” can occur by sitting on one’s rights after learning of grounds for disqualification.
Comment: The rule applied by the trial court – that disclosure requirements are nonnegotiable and shall not be waived – is a bright and broad line. The narrower reading of the meaning of waiver, allowing for waiver of disclosure requirements when a party is “on notice of a ground for disqualification, yet failed to inquire further,” will require a more probing and complicated inquiry.