to de-emphasize Justice White's narrowing language. See Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir.1994). In Schmitz, the court criticized case law suggesting "that an impression of bias is sufficient while an appearance [of bias] is not."
In most, if not all, of these federal cases, the issue was whether the arbitrator had failed to make a pre-selection disclosure of facts that might have demonstrated bias or a conflict of interest on his part and whether this nondisclosure itself demonstrated an ‘evident partiality’ on the part of the arbitrator under 9 U.S.C. § 10(a)(2) so as to justify the vacatur of the resulting arbitration award. The opinion in one of these cases, Schmitz v. Zilveti, [20 F.3d 1043 (9th Cir.1994) ], provides a helpful explanation of the distinction between what have become known as ‘nondisclosure’ cases and ‘actual bias' cases:“ ‘Appellants argue that Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301 (1968), requires us to reverse the district court.
The lessor-appellants Rowlin L. Lichter, M.D., Linda Maile Harris, and Marcy Friedman, as trustees of and for the Martin H. Lichter Education Trust [collectively, "the trustees"], appeal from the findings of fact, conclusions of law, and order of the circuit court of the first circuit, the Honorable Gail C. Nakatani presiding, filed on February 18, 2000, vacating an arbitration decision dated September 12, 1999. On appeal, the trustees contend that the circuit court: (1) clearly erred in its findings of fact (FOFs) Nos. 8, 12, 13, 17, 18, 22, and 25 through 30; (2) erred in applying the standard of "evident partiality," as set forth in Schmitz v. Zilveti, III, 20 F.3d 1043 (9th Cir. 1994), to its conclusions of law (COLs) Nos. 4 through 6 and 11 through 19; (3) erred in applying the code of ethics established by the International Center for Dispute Resolution for Arbitrators in Commercial Disputes to its COLs Nos. 10, 13, 20, and 21; (4) erred, as set forth in its COL No. 8, in concluding (a) that the disclosure by William M. Swope, Esq., the arbitrator appointed by the trustees to the three-member arbitration panel, was insufficient to shift the burden to the plaintiff-appellee Daiichi Hawaii Real Estate Corporation (Daiichi) to investigate any conflicts of interest between the parties and Swope and (b) that Daiichi's failure to challenge Swope's appointment as an arbitrator did not constitute a waiver for purposes of a motion to vacate the arbitration decision based on "evident partiality," pursuant to Hawai`i Revised Statutes (HRS) § 658-9(2) (1993); (5) erred, as set forth in its COL Nos. 25-26, in concluding that Swope had engaged in gross negligence and could no
" Id. at" 148-49, 89 S.Ct. 337. In Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir. 1994), we vacated an arbitration award for evident partiality where the arbitrator's law firm had represented the parent company of a party "in at least nineteen cases during a period of 35 years[,] the most recent representation end[ing] approximately 21 months before [the] arbitration was submitted." Id. at 1044.
Id. at 339. More recently, in Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir. 1994), a nondisclosure case involving an arbitrator who had no actual knowledge of a conflict, the Ninth Circuit held that a party's failure to investigate potential conflicts of interest may result in a "reasonable impression of partiality under Commonwealth Coatings." Id. at 1049.
Evident partiality may be found in two situations: when an arbitrator fails to make necessary disclosures to the parties, or when additional facts show actual bias or improper motive, even if the arbitrator makes the necessary disclosures. See Valrose Maui, Inc. v. Maclyn Morris, Inc. , 105 F.Supp.2d 1118, 1124 (D. Haw. 2000) ; see also Schmitz v. Zilveti , 20 F.3d 1043, 1045-47 (9th Cir. 1994) (distinguishing the evident partiality standards applied in "nondisclosure" cases and "actual bias" cases). This court's recent decisions in Nordic and Madamba have addressed the evident partiality standard in nondisclosure cases.
" We held that evident partiality is "present when undisclosed facts show ‘a reasonable impression of partiality.’ " Daiichi, 103 Hawai‘i at 339, 82 P.3d at 425 (emphasis added) (quoting Schmitz v. Zilveti, 20 F.3d 1043, 1046 (9th Cir.1994) ). Under this analysis, a finding of evident partiality related to a failure to disclose is not dependent on a showing that the arbitrator was actually biased, but instead stems from the nondisclosure itself. Id. at 352, 82 P.3d at 438 (citing Schmitz, 20 F.3d at 1045 ).
Holding that Commonwealth Coatings created a "reasonable impression of partiality" standard, we clarified that its standard differed from the strict standards applicable to judges, because "arbitrators will nearly always, of necessity, have numerous contacts within their field of expertise . . . [and] have many more potential conflicts of interest than judges." Schmitz v. Zilveti, 20 F.3d 1043, 1046 (9th Cir. 1994); see also Commonwealth Coatings, 393 U.S. at 148 (observing that "arbitrators cannot sever all their ties with the business world"). As Justice White recognized, "an arbitrator's business relationships may be diverse indeed, involving more or less remote commercial connections with great numbers of people.
Coatings created a “reasonable impression of partiality” standard, we clarified that its standard differed from the strict standards applicable to judges, because “arbitrators will nearly always, of necessity, have numerous contacts within their field of expertise ... [and] have many more potential conflicts of interest than judges.” Schmitz v. Zilveti, 20 F.3d 1043, 1046 (9th Cir.1994) ; see also Commonwealth Coatings, 393 U.S. at 148, 89 S.Ct. 337 (observing that “arbitrators cannot sever all their ties with the business world”). As Justice White recognized, “an arbitrator's business relationships may be diverse indeed, involving more or less remote commercial connections with great numbers of people.
In addition, other circuits that have considered nondisclosure in arbitration cases have applied de novo review when applying law to facts. See, e.g., Olson v. Merrill Lynch, Pierce, Fenner Smith, Inc., 51 F.3d 157, 160 (8th Cir. 1995); Schmitz v. Zilveti, 20 F.3d 1043, 1045 (9th Cir. 1994). III. A.