Honeycutt v. JPMorgan Chase Bank, N.A.
236 Cal. Rptr. 3d 255
| Cal. Ct. App. 5th | 2018Background
- Honeycutt’s employment dispute with JP Morgan Chase was compelled to arbitration; AAA appointed a retired judge as arbitrator in July 2014.
- The arbitrator completed an 11-page AAA disclosure worksheet but the parties received only 10 pages; the missing page included a question whether the arbitrator would entertain offers to serve as a neutral in other cases (arbitrator had answered "yes").
- The arbitrator wrote on the next page that she would "entertain offers to serve as a dispute resolution in other cases" and would "evaluate any potential conflict" before accepting.
- During the pendency of the arbitration the arbitrator accepted appointments in eight other employment matters involving Chase’s counsel but timely disclosed only four of those; four disclosures were not provided to the parties until after an interim adverse award.
- Honeycutt moved to disqualify and later petitioned to vacate the award; trial court confirmed the award. On appeal the court considered whether the arbitrator violated Ethics Standards 7 and 12 and whether that required vacatur under Code Civ. Proc. § 1286.2.
Issues
| Issue | Honeycutt's Argument | Chase's Argument | Held |
|---|---|---|---|
| Did arbitrator violate Ethics Std. 12(b) by not properly including/phrasing initial disclosure about entertaining offers? | Arbitrator's initial disclosures were defective (missing page) and handwritten note did not satisfy Std.12(b)’s required statement to inform parties of offers/acceptances. | Parties received the explanatory note and thus had sufficient notice; objection was untimely. | Court: Arbitrator violated Std.12(b), but Honeycutt waived right to disqualify based on that defect because she knew of the omission and failed to object within the statutory period. |
| Did arbitrator violate Std.12(d) by failing to notify parties within five days of offers and acceptances? | Failure to disclose offers and timely notices of acceptances for multiple appointments involving Chase’s counsel. | Some disclosure letters were prepared and provided; any lapse was inadvertent or administrative. | Court: Arbitrator violated Std.12(d) by not timely informing parties of offers and acceptances; accepted that some letters were not provided until after the interim award. |
| Did arbitrator violate Std.7(d) (continuing duty) by failing to disclose service in four pending arbitrations involving the same counsel? | Non-disclosure of four pending arbitrations was a required continuing disclosure under Std.7 and constituted a ground for disqualification; arbitrator was actually aware of those appointments. | Any failure to transmit notices to parties was administrative and does not show arbitrator's bad faith or actual awareness of nondisclosure. | Court: Arbitrator was actually aware she was serving in those other matters; failure to disclose those pending arbitrations under Std.7(d) required vacatur under §1286.2(a)(6)(A). |
| Was vacatur barred by waiver/untimeliness? | Waiver does not apply to the Std.7 non-disclosures because Honeycutt did not know of the missing supplemental disclosures until after the interim award and she moved within 15 days of learning them. | Honeycutt should have objected earlier because the initial packet signaled missing pages; she waived rights by not timely seeking disqualification. | Court: Waiver applied only to the Std.12(b) initial-defect claim; it did not bar §1286.2 vacatur for the Std.7(d) failures because those supplemental disclosures surfaced only after the hearing and she timely moved after learning of them. |
Key Cases Cited
- Mahnke v. Superior Court, 180 Cal.App.4th 565 (clarifies courts' concern with arbitrator neutrality)
- Azteca Const., Inc. v. ADR Consulting, Inc., 121 Cal.App.4th 1156 (discusses legislative intent to regulate arbitrator ethics and vacatur remedies)
- Ovitz v. Schulman, 133 Cal.App.4th 830 (explains Standards 7 and 12 and disclosure duties)
- Haworth v. Superior Court, 50 Cal.4th 372 (statute requires disclosure of specified matters and judicial review for nondisclosure)
- United Health Centers of San Joaquin Valley, Inc. v. Superior Court, 229 Cal.App.4th 63 (interprets waiver rule under §1281.91(c))
- ECC Capital Corp. v. Manatt, Phelps & Phillips, LLP, 9 Cal.App.5th 885 (clarifies "actual awareness" requirement under §1286.2(a)(6)(A))
- Dornbirer v. Kaiser Foundation Health Plan, Inc., 166 Cal.App.4th 831 (party waives disqualification right by participating after awareness of disclosure defects)
- Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP, 219 Cal.App.4th 1299 (failure to timely disclose a known ground for disqualification compels vacatur)