Different Disclosure Rules Apply To Consumer Arbitrations And This Was Not A Consumer Arbitration.
"Do the Ethics Standards require a retained arbitrator in a noncommercial [sic] case to disclose in one matter that he has been subsequently hired in a second matter by the same party and same law firm? We hold that the answer is 'no,' at least where the arbitrator has previously informed the parties—without any objection thereto—that no disclosure will be forthcoming in this scenario. Because the arbitrator’s disclosures were proper here, the trial court properly overruled an objection based on inadequate disclosure. We accordingly affirm." Sitrick Group, LLC v. Vivera Pharmaceuticals, Inc., B317546 (2/2 3/30/23) (Hoffstadt, Lui, Ashmann-Gerst). We added the "sic" only because we believe the court meant to write that this was a nonconsumer arbitration, though the opinion refers to a "noncommercial" arbitration.
The arbitrator would have been required to disclose during a pending arbitration that he was taking on another arbitration that had the same law firm and the same party (Sitrick) involved in the pending arbitration, but for disclosures that the arbitrator made at the beginning of the first arbitration pursuant to a JAMS checklist.
The arbitrator had disclosed: (1) that he “will . . . entertain offers of employment or new professional relationships . . . from a party [or] lawyer in the arbitration . . . while [the] arbitration is pending, including offers to serve as a dispute resolution neutral in another case,” and relatedly advised that “[i]f this is a nonconsumer arbitration, the arbitrator will not inform the parties if he or she subsequently receives an offer or new matter while the arbitration is pending"; that based on the submissions of the parties, it was a nonconsumer arbitration; (3) that disclosures #1 and #2 “constitute[] a waiver of any further requirement to disclose subsequent employment involving the same parties or lawyers or law firms.”
As a courtesy, the arbitrator disclosed the subsequent arbitration. Vivera argued he should have been removed as arbitrator, because he would have the beneficial relationship in the future with Sitrick and its law firm, who were in the pending arbitration. The trial court and the Court of Appeal both agreed that, given the disclosures upfront, there was no obligation to disclose the second arbitration.
Did the subsequent disclosure trigger a new opportunity to strike the arbitrator? No, the subsequent disclosures was unnecessary. Or, as we and the maxims of equity might say, superfluity does not vitiate.
COMMENT: If this had been a consumer arbitration, there would have been an ongoing obligation to disclose. Perhaps then the "courtesy disclosure" would have triggered an opportunity to peremptorily strike the arbitrator, because the disclosure would have been more than a mere courtesy: it would have been a necessary disclosure.
In the pending nonconsumer arbitration, Vivera was not exactly hung out to dry. When the arbitrator disclosed that he would accept future business, Vivera could have objected at that time.
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