Ethics

• Jurisdiction: California,United States
• Author: By Kermit D. Marsh
• Citation: Vol. 2018
• Publication year: 2018

Ethics

By Kermit D. Marsh

Honeycutt and Cox: What Steps Can Be Taken to Avoid Vacatur of Arbitration Awards?

Arbitration is one of the tools which institutional clients employ to manage disputes. The recent decisions in Honeycutt vs. JPMorgan Chase Bank, N.A. (2018) 25 Cal.App.5th 909 and Cox vs. Bonni (2018) 2018 Cal.App. Lexus 1173 have been much discussed in terms of the duty of the arbitrator to disclose prior dealings between the arbitrator and parties or counsel. There may also be reasons to look at these decisions as a basis for changing the manner in which counsel conduct themselves in the arbitration process, in order to avoid the vacation of an arbitration award.

In 2018, the California courts reminded the legal community of the potential consequences if an arbitrator fails to disclose prior dealings with a party or counsel in arbitration. In Honeycutt, the Court of Appeal vacated an arbitration award due to the arbitrator's failure to fully disclose all prior dealings with the opposing party. In December, in Cox, the Court of Appeals, declined to vacate an arbitration award which was challenged due to the arbitrator's failure to fully disclose all prior dealings with the opposing party. In light of the decisions in Honeycutt and Cox, in house counsel may want to revisit their practices in the arbitration process.

The Decisions

Honeycutt

The plaintiff, Patricia Honeycutt ("Honeycutt"), filed an action against her former employer, JPMorgan Chase Bank, N.A. ("Chase"), in which she alleged discrimination, retaliation, wrongful termination and related claims. Chase successfully moved to compel arbitration pursuant to contract. The American Arbitration Association ("AAA") appointed a retired judge to serve as the arbitrator. The notice of appointment included a copy of AAA's disclosure worksheet, which had been completed by the arbitrator; however, one page of the disclosure form was missing. On the missing page, the arbitrator stated "Yes" in response to the question whether the arbitrator would, during the pendency of the arbitration, "entertain offers of employment or new professional relationships in any capacity other than as a lawyer, expert witness, or consultant from a party or a lawyer for a party, including offers to serve as a dispute resolution neutral in another case."

A six day arbitration was conducted, and the arbitrator issued an interim award in favor of Chase and against Honeycutt on all claims. Two weeks later, counsel for Honeycutt wrote to AAA's manager of alternative dispute resolution services, stating: "It is rather stunning that [the arbitrator] found that [Honeycutt] did not meet her burden on every single cause of action given how strong the evidence was in [her] favor and the presentation of [her] case at the arbitration hearing." More importantly, counsel for Honeycutt asked the AAA manager to identify every other case the arbitrator had accepted involving Chase and its counsel of record. Counsel added that when AAA had provided the disclosure form, the copy received by plaintiff's counsel was "missing a...