Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. Ct. No. GC036709 Jan. A. Pluim, Judge.
Law Offices of James P. Wohl and James P. Wohl, for Plaintiff and Appellant.
Law & Brandmeyer LLP; Schmid &Voiles and Denise H. Greer, for Defendant and Respondent Cynthia L. Martel.
ZELON, J.
INTRODUCTION
Appellant Mara Holmes sued several physicians and their respective employers for failing to diagnose a brain tumor. Holmes’ claims against one of the physicians, Respondent Cynthia Martel, were referred to binding arbitration pursuant to an arbitration agreement. Following an unfavorable arbitration result, Holmes filed a motion to vacate the arbitration award, arguing that the neutral arbitrator engaged in misconduct by: (1) engaging in an ex parte conversation during which he permitted a nonparty to attend the arbitration proceedings, and (2) failing to disclose that he had previously served on the board of a medical center. The trial court denied the motion to vacate. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
On September 25, 2006, Appellant Mara Holmes filed a medical malpractice lawsuit alleging that Defendants Cynthia Martel, Seetha Lath, David Schultz and their respective employers had “fail[ed] to diagnose an early stage skull tumor.” Holmes and Martel subsequently entered into a written stipulation “to stay further proceedings... as to these parties only” pending a binding arbitration. Pursuant to Article 3 of the parties’ arbitration agreement, Holmes and Martel selected a panel of three arbitrators consisting of Honorable Robert W. Parkin, who was to serve as the neutral arbitrator, Honorable Robert Roberson, who was the claimant-party arbitrator, and P. Theodore Hammond, who was the defendant-party arbitrator. The arbitration was scheduled to commence on July 7, 2008.
Wilshire Oncology Medical Group, which was Martel’s employer, was initially included as a defendant in the arbitration. However, on May 19, 2008, Holmes voluntarily dismissed her claim against Wilshire without prejudice.
When Holmes and her attorney, James Wohl, arrived at the arbitration, they saw Craig Donohue, counsel for Defendant Seetha Lath, in the hearing room. Although Lath was a defendant in Holmes’ civil action, she was not a party to the arbitration. Holmes alleges that Wohl asked Martel’s attorney, Ken Brandmeyer, why Donahue was at the arbitration. Brandmeyer stated that he had called Judge Parkin the prior evening and informed him that Donahue was going to attend. Before the arbitration began, Wohl informed the arbitrators that his client objected to the Donahue’s presence at the hearing. Judge Parkin heard argument on the issue and allowed Donahue to stay, stating that he believed arbitrations should generally be open to the public. The arbitration hearing lasted five days and Donahue attended approximately half of the proceedings. On July 16, 2008, the arbitrators entered a unanimous ruling finding that Martel’s treatment of Holmes was within the appropriate standard of care and was not the cause of Holmes’ injury.
On August 29, 2008, Holmes filed a motion to vacate the arbitration award arguing that Judge Parkin committed misconduct by engaging in ex parte communications with Brandmeyer and then allowing Donahue to attend the hearing. Holmes contended that her rights were “substantially prejudiced” by Parkin’s misconduct because Donahue’s presence made her feel “ very uncomfortable” and “affected the presentation of evidence.” Holmes further contended that it was prejudicial to permit Donahue, who represented a defendant who was not participating in the arbitration, to observe the testimony of Holmes’ witnesses. Holmes alleged that, in effect, Donahue was receiving an unfair “sneak peek” at witnesses who might later testify at trial against Defendant Lath.
Holmes also argued that the award should be vacated because, shortly after the arbitration concluded, Holmes discovered that Judge Parkin failed to disclose he had previously served on the Board of Trustees of the St. Mary’s Medical Center. Holmes alleged that Parkin’s role with St. Mary’s constituted “an obvious affiliation and association with the health care provider side of the market, ” raising “an inference... if not the presumption that he is biased and should have disqualified himself.”
In response to Holmes’s motion to vacate, Judge Parkin and Brandmeyer each filed a declaration stating that they had not communicated at any time prior to the arbitration. However, Parkin’s declaration went on to admit that he received a voice message from Craig Donahue a week before the arbitration began requesting that Donahue be permitted to attend the hearing. Parkin further stated that he returned Donahue’s call and informed him that he could attend the arbitration. Parkin’s decision was based on his belief that “arbitration proceedings should be conducted in an open and transparent manner and subject to the same public scrutiny as a trial in the Superior Court.”
Parkin’s declaration also responded to Holmes’ allegations regarding his role with St. Mary’s Medical Center. Specifically, Parkin explained that:
I served on the Board of Trustees of St. Mary’s Hospital Foundation, a fund raising group, approximately thirty (30) years ago and from that position I was made a member of the Board of Trustees of St. Mary’s Medical Center, a broad based community support group for the hospital. I never actively participated with the Board of Trustees and have not been a member for at least the last ten (10) years. Neither the hospital Foundation nor the Board of Trustees plays any part in governing St. Mary’s Hospital or any of its staff. Consequently, I feel there is no need to make a disclosure of this experience.
The trial court heard argument on Holmes’s motion to vacate on October 7, 2008. During the hearing, the trial court asked Wohl to describe how Holmes had been prejudiced by Donahue’s presence at the arbitration. Although Wohl admitted that Donahue did not talk or participate in the hearing, he contended that Donahue’s presence “had an effect on my conduct of the arbitration, and the ultimate fairness of this arbitration to my client and my client’s view of the fairness of the arbitrators.” Wohl also reiterated that, by attending the arbitration, Donahue “had the opportunity to observe all of our witnesses, observe the conduct of the arbitration and observe their demeanor.”
The trial court denied the motion to vacate, stating that “[t]here is an insufficient showing under CCP Section 1286.2 to vacate the Arbitration Award. Even if Judge Parkin’s vote is not counted, there was a majority of votes in favor of defendants by the remainder of the arbitration panel.” On December 1, 2008, the trial court entered judgment in favor of Martel. This timely appeal followed.
DISCUSSION
A. Governing Legal Principles and Standard of Review
“Title 9 of the Code of Civil Procedure, as enacted and periodically amended by the Legislature, represents a comprehensive statutory scheme regulating private arbitration in this state. ([Code Civ. Proc., ] § 1280 et seq.) Through this detailed statutory scheme, the Legislature has expressed a ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.’ [Citation.] Consequently, courts will ‘“indulge every intendment to give effect to such proceedings.”’ [Citations.]” (Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 9.)
Statutory references are to the Code of Civil Procedure unless otherwise indicated.
“The exclusive grounds for vacating an arbitration award are listed in section 1286.2 of the California Arbitration Act.” (Mossman v. City of Oakdale (2009) 170 Cal.App.4th 83, 88.) The section states, in relevant part, that “the court shall vacate the award if the court determines... (1) The award was procured by corruption, fraud or other undue means.... [¶] (3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator.” To vacate an award under Section 1286.2, the moving party must make “a showing of substantial prejudice.” (Rosenquist v. Haralambides (1987) 192 Cal.App.3d 62, 69 (Rosenquist).)
We review the trial court’s denial of a motion to vacate an arbitration award under a de novo standard. (Advanced Micro Devices v. Intel Corp. (1994) 9 Cal.4th 362, 376 fn. 9.) However, “we must accept the trial court’s findings of fact if substantial evidence supports them, and we must draw every reasonable inference to support the award.” (Pierotti v. Torian (2000) 81 Cal.App.4th 17, 24.)
B. The Trial Court Properly Denied Holmes’ Motion to Vacate
Holmes argues that there are two independent grounds to vacate the arbitration award. First, she contends that Judge Parkin engaged in misconduct by communicating ex parte with Craig Donahue, a nonparty to the arbitration, and then permitting Donahue to observe the arbitration proceedings. Second, Holmes alleges that Parkin failed to disclose that he had previously served on the board of the St. Mary’s Medical Center. For the reasons that follow, we find that the trial court properly concluded that Holmes failed to demonstrate sufficient grounds to vacate the arbitration award.
{1} Parkin’s ex parte communications and Donahue’s observation of the arbitration
Holmes first argues that Judge Parkin engaged in misconduct by speaking with Craig Donahue ex parte and then permitting him to observe the arbitration. We consider first whether these alleged acts actually constituted “misconduct” and then analyze whether Holmes was prejudiced by such conduct.
{a} Judge Parkin’s alleged misconduct
{i} Ex Parte Communications
“Neutral arbitrators are governed by Ethics Standards for Neutral Arbitrators in Contractual Arbitration (Standards) adopted in 2002 under the authority of section 1281.85 (and now found in the Cal. Rules of Court).” (Jakks Pacific, Inc. v. Superior Court (2008) 160 Cal.App.4th 596, 605.) Standard 14, subdivision (a) provides that “[a]n arbitrator must not initiate, permit, or consider any ex parte communications or consider other communication made to the arbitrator outside the presence of all of the parties concerning a pending or impending arbitration except as permitted by this standard.” (Standards, std. 14, subd. (a).) The Subdivision does not contain any language that limits its application to communications with parties or other participants in the arbitration. Therefore, under the plain language of the Standard, ex parte communications with a third party that “concern[] a pending or impending arbitration” are generally not permitted. (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103 [“If the statutory language is clear and unambiguous our inquiry ends. ‘If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.’ [Citations.]”]) As a result, Parkin’s exchange with Donahue, which concerned his attendance at the pending arbitration, violated Standard 14 unless the communication fell within an exception to subdivision (a).
Standard 14, subdivision (b), which is the only exception that has any possible relevance here, allows the arbitrator to “communicate with a party in the absence of other parties about administrative matters, such as setting the time and place of hearings or making other arrangements for the conduct of the proceedings.” Although Parkin’s communications with Donahue arguably involved “administrative matters, ” the text of subdivision (b) states that the exception described therein is limited to communications with “parties.” The Standards, in turn, define the term “party” as “a party to the arbitration agreement” or “a representative of the party.” (See, Standards, std. 2, subd. (p).) By its plain terms, subdivision (b) does not apply to communications with Donahue, who was neither a party to the arbitration agreement or a representative of any party to the agreement.
The only other exception to Standard 14, subdivision (a)’s general bar on ex parte communications is found in subdivision (c), which pertains to communications between the arbitrator and “a disinterested expert on the subject matter of the arbitration, ” and has no relevance here.
Under Standard 14, Parkin was not permitted to engage in ex parte communications with Donahue even on an administrative matter. As a result, Parkin should have refused to participate in the communication. Having done so, he should, at a minimum, have advised appellants’ counsel of the ex parte communication prior to the arbitration and provided advance notice that he intended to permit Donahue to attend the proceedings. (See, e.g., A.M. Classic Const., Inc. v. Tri-Build Development Co. (1999) 70 Cal.App.4th 1470, 1476 (A.M. Classic) [holding that “the arbitrator should have advised appellants’ counsel of the ex parte communication and that he would be issuing an amended arbitration award resolving the stop notice claim”].)
The parties dispute whether Parkin also had an ex parte communication with Brandmeyer regarding Donahue’s attendance at the hearing. We need not resolve this factual dispute because, even assuming those communications occurred, the communications would have no effect on our ruling.
{ii} Parkin’s decision to permit Donahue to attend the arbitration
Holmes also argues that Parkin engaged in misconduct when he permitted a third party to attend the hearing. Holmes contends that the parties’ arbitration agreement did not “provide for public attendance” and that Parkin’s decision “deviated” from standard procedures applicable to arbitrations. Numerous cases have recognized that privacy is one of the primary advantages of arbitration. (See Yuen v. Superior Court (2004) 121 Cal.App.4th 1133, 1141 (conc. opn. of Mosk, J.) [“Beyond arbitration’s traditional carrots of relative speed and greater economy, privacy is the other leg in this troika of features”]; Stolt-Nielsen, S.A. v. AnimalFeeds International Corp. (April 27, 2010, No. 08-1198) ___ U.S.___ [176 L.Ed.2d 605, 625] (Stolt-Nielsen) [“‘the presumption of privacy and confidentiality’... applies in many bilateral arbitrations’”]; Guyden v. Aetna, Inc. (2008) 544 F.3d 376, 385 [describing confidentiality as “paradigmatic aspect of arbitration”].) Indeed, according to one California treatise, “nonparties are not allowed to attend [arbitration] hearings. Indeed, privacy is one of the strong advantages of arbitration.” (Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2006) ¶ 5:395.)
Although the above authorities indicate that arbitrations are frequently closed to the public, it is also well-established that “‘“arbitration is... a matter of agreement between the parties”’[citation].” (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 830.) As a result, the “parties are ‘generally free to structure their arbitration agreements as they see fit.’ [Citations]... and may agree on rules under which any arbitration will proceed.” (Stolt-Neilsen, supra, ___ U.S. at p. ___ [176 L.Ed.2d at p. 623.) Holmes admits that, in this case, the rules of the forum governing her arbitration had no specific “provision dealing with the public or private nature of their arbitrations.” Instead, those rules simply provided that “the conduct of the arbitration proceedings shall be governed by the provisions of CCP secs. 1282-1284.2.” Section 1282.2, subdivision (c), in turn, states that “The neutral arbitrator shall preside at the hearing, shall rule on... questions of hearing procedure and shall exercise all powers relating to the conduct of the hearing.” The Courts of Appeal have held that this section provides “[t]he arbitrator... broad discretion in conducting the hearing.” (Evans v. CenterStone Development Co. (2005) 134 Cal.App.4th 151, 164.) We believe that these discretionary powers extend to decisions regarding third-party attendance at the hearing, which is consistent with the rules that govern many other arbitrational forums. (See, e.g., American Arbitration Association, Commercial Arbitration Rules and Mediation, Rule 23 [“It shall be discretionary with the arbitrator to determine the propriety of the attendance of any other person other than a party and its representatives”]; JAMS Comprehensive Arbitration Rules & Procedures, Rule 26 [“Subject to the discretion of the Arbitrator or agreement of the Parties, any person having a direct interest in the Arbitration may attend the Arbitration Hearing. The Arbitrator may exclude any non-Party from any part of a Hearing”].) Based on the record in this case, which does not contain any evidence that Holmes was prejudiced by Donahue’s presence, we conclude that Parkin acted within his discretion when he permitted Donahue to attend the arbitration.
{b} Holmes has failed to establish that she was prejudiced by Parkin’s conduct
Although Parkin’s communications with Donahue violated Standard 14, that does not necessarily support vacating the arbitration award. Section 1286.2, subdivision (a)(3) states than an arbitration award shall be vacated only if “the rights of the party were substantially prejudiced by misconduct of a neutral arbitrator.” (See also Rosenquist, supra, 192 Cal.App.3d at p. 69 [to vacate an award under Section 1286.2, the moving party must make “a showing of substantial prejudice.” ].) Holmes argues that, as a result of Parkin’s ex parte communications, Donahue was permitted to attend the arbitration and that she was then prejudiced by his presence at the hearing. Even if we assume that, but for the disputed communications, Donahue would not have been allowed to attend the arbitration, Holmes has failed to demonstrate that she was actually prejudiced.
Holmes contends that Donahue’s observation of the arbitration prejudiced her in two ways. First, she alleges that it affected her attorney’s “presentation of the evidence.” Second, it allowed Donahue to get a “sneak peak” at witnesses who might later testify at trial against Defendant Lath. Holmes, however, has never explained how her presentation would have differed if Donahue did not attend the hearing. Nor has Holmes explained how getting a “sneak peak” of her witness’s testimony affected the outcome of the arbitration. Although she theorizes that Defendant Lath gained an unfair advantage because her attorney got a preview of how Holmes’ witnesses would testify in the civil proceedings, it is unclear how that “preview” could have affected the outcome of the actual arbitration. Moreover, Holmes has not pointed to any evidence indicating that Lath actually benefitted from Donahue’s attendance. The record is simply devoid of any evidence that Donahue’s presence at the hearing, or the ex parte communications that arguably led to his attendance, affected the result of the arbitration or prejudiced Holmes in any way. Therefore, the ex parte communications are insufficient to vacate the arbitration award. (See A.M. Classic, supra, 70 Cal.App.4th at p. 1476 [upholding arbitration where “arbitrator should have advised appellants’ counsel of... ex parte communication” but appellant failed to establish prejudice.].)
To the extent Holmes is arguing that Parkin’s ex parte communications caused the arbitration award to be “procured by corruption, fraud or other undue means, ” (§ 1286.2, subd. (a)), we reject that argument. In order to show that an ex parte communication caused an arbitration award to be obtained by improper means within the meaning of Section 1286.2, subdivision (a), the moving party must demonstrate that “the arbitrator was improperly influenced or actually considered evidence outside the original arbitration proceedings.” (A.M. Classic, supra, 70 Cal.App.4th at p. 1476.) Holmes has made no such showing.
{c} Parkin was not required to disclose his prior involvement with the St. Mary’s Hospital
Holmes also argues that the arbitration award should be vacated because, shortly after the arbitration concluded, she discovered that Judge Parkin failed to disclose he was a former board member of St. Mary’s Medical Center. However, Judge Parkin’s nondisclosure of his prior relationship with St. Mary’s is not a basis for vacating the award.
Section 1281.9, subdivision (a) requires that “[i]n any arbitration pursuant to an arbitration agreement, when a person is to serve as a neutral arbitrator, the proposed neutral arbitrator shall disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial.” Section 1286.2, subdivision (a)(6), in turn, states that “an arbitrator’s failure to timely disclose a disqualification ground is a basis for vacating an arbitration award.” (Guseinov v. Burns (2006) 145 Cal.App.4th 944, 957 (Guseinov).) “‘Whether an award is tainted by bias because an arbitrator failed to disclose a particular relationship is a factual determination made by the court reviewing the award. [Citation.] The party claiming bias bears the burden of establishing facts supporting its position. [Citation.] The test is objective, i.e., whether the relationship would create an impression of bias in the mind of a reasonable person.’ [Citations.]” (Ibid.)
In the trial court, Holmes’s attorney submitted a declaration stating that, after the arbitration, he “came across the biography of Judge Parkin in which he was described as being on the Board of Trustees of the St. Mary’s Medical Center.” Judge Parkin, in turn, filed a declaration explaining the nature of that relationship. Specifically, Parkin stated that he “served on the Board of Trustees of St. Mary’s Hospital Foundation, a fund raising group, approximately thirty (30) years ago.” Thereafter, Parkin was “made a member of the Board of Trustees of St. Mary’s Medical Center, a broad based community support group for the hospital, ” but “never actively participated with the Board of Trustees and ha[s] not been a member for at least the last ten (10) years.” Finally, Parkin stated that “Neither the hospital Foundation nor the Board of Trustees plays any part in governing St. Mary’s Hospital or any of its staff.” Holmes has not introduced any evidence contradicting Parkin’s statements or any additional evidence regarding the nature of Parkin’s role with St. Mary’s.
Section 1281.9 includes a nonexhaustive list of the types of potential conflicts that a neutral arbitrator must disclose prior to an arbitration. Most of the required disclosures involve personal, professional, business or financial relationships that the arbitrator has (or has had) with the parties to the arbitration or their respective counsel. In analyzing these disclosure requirements, the Courts of Appeal have emphasized that “[a]rbitration awards need not be vacated in every case in which there has been some contact between the arbitrator and [a party or party representative], particularly when the contact is slight or attenuated.” (Ceriale v. Amco Ins. Co. (1996) 48 Cal.App.4th 500, 505.) Moreover, “‘[b]ecause arbitrators are selected for their familiarity with the type of business dispute involved, they are not expected to be entirely without business contacts in the particular field.’” (Guseinov, supra, 145 Cal.App.4th at p. 959) Thus, “‘ordinary and insubstantial business dealings’” generally need not be disclosed. (Ibid.)
In this case, there is no evidence that the parties or attorneys in the arbitration had any connection to St. Mary’s Foundation, St. Mary’s Medical Center or St. Mary’s Hospital. Despite the absence of any direct relationship between St. Mary’s and the parties in this proceeding, Holmes contends that Parkin’s connection with St. Mary’s constituted “an obvious affiliation and association with the health care provider side of the market, ... rais[ing an] inference... that he is biased and should have disqualified himself.” Although there may be circumstances under which an arbitrator would be required to disclose a business relationship with an entity that has no connection to a party or any attorney in the arbitration, such disclosure was not required here. Parkin has indicated that his relationship ended with St. Mary’s over 10 years ago and that he never actively participated in the board. Parkin also contradicts Holmes’s unsupported allegation that his involvement with St. Mary’s constituted an “affiliation and association with the health care provider side of the market.” According to Parkin, St. Mary’s Medical Center was merely “community support group for [St. Mary’s] hospital” that played no role in governing St. Mary’s hospital. Finally, Holmes has not introduced any evidence that St. Mary’s Foundation or Medical Center could have been affected by the outcome of the arbitration.
Given the extremely attenuated, decade-old relationship between Parkin and St. Mary’s, and the lack of any connection between St. Mary’s and this particular arbitration, we conclude that Parkin’s role at St. Mary’s could not cause “a person aware of the facts to reasonably entertain a doubt that [Parkin] would be able to be impartial.” (§ 1281.9, subd. (a).)
DISPOSITION
The trial court’s denial of Holmes’ motion to vacate the arbitration award and subsequent judgment of dismissal as to appellant Martel are affirmed. Martel is awarded her costs on appeal.
We concur: WOODS, Acting P. J., JACKSON, J.